Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as "believe," "expect," "anticipate," "project," "target," "plan," "optimistic," "intend," "aim," "will" or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2011, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except where the context otherwise requires and for the purposes of this report only:

º "THT," "Company," "we," "us," or "our" are to the combined business of THT Heat Transfer Technology, Inc., a Nevada corporation, and its consolidated subsidiaries: Megaway, Star Wealth, Siping Juyuan and Beijing Juyuan;
º "Megaway" are to Megaway International Holdings Limited, a BVI company;
º "Star Wealth" are to Star Wealth International Holdings Limited, a Hong Kong company;
º "Siping Juyuan" are to Siping City Juyuan Hanyang Plate Heat Exchanger Co. Ltd., a PRC company;
º "Beijing Juyuan" are to Beijing Juyuan Hanyang Heat Exchange Equipment Co., Ltd., a PRC company;
º "BVI" are to the British Virgin Islands;
º "Hong Kong" are to the Hong Kong Special Administrative Region of the People's Republic of China;
º "PRC" and "China" are to the People's Republic of China;
º "SEC" are to the Securities and Exchange Commission;
º "Exchange Act" are to the Securities Exchange Act of 1934, as amended;
º "Securities Act" re to the Securities Act of 1933, as amended;
º "Renminbi" and "RMB" are to the legal currency of China; and
º "U.S. dollars," "dollars" and "$" are to the legal currency of the United States.

Overview of our Business

We are a leading total solution provider in the heat exchange industry. Our major products are plate heat exchangers, heat exchanger units, air-cooled heat exchangers and shell-and-tube heat exchangers. Unlike most other heat exchanger manufacturers in China, we not only provide heat exchange products, but also provide total solutions to our customers. As a total solutions provider, we analyze the working condition of our customers, provide optimized designs based on analysis and simulation, offer high quality heat exchange products, and continuously assist our customers in improving the heat exchange process.

Over the past ten years, we have successfully completed over 3,000 projects in more than 15 industries, including metallurgy, heat and power, petrochemical, food and beverage, pharmaceutical and shipbuilding. We have provided heat exchange solutions to Fortune 500 companies, including Shell, BP, BASF, LG, Sinopec and China Shenhua. We have also provided heat exchange products for important Chinese and international projects such as the Beijing 2008 Olympics Wukesong Sports Center, Guangdong Linao nuclear plant and BASF Chemical plant in Germany.

First Quarter Financial Performance Highlights

The following summarizes certain key financial information for the first quarter of 2012:

º Sales revenue: Sales revenue decreased by $2.60 million, or 18.53%, to $11.45 million for the three months ended March 31, 2012, from $14.05 million for the same period in 2011.
º Gross profit: Gross profit decreased by $1.44 million, or 23.78%, to $4.61 million for the three months ended March 31, 2012, from $6.04 million for the same period in 2011. As a percentage of sales revenue, gross profit decreased by 2.77% to 40.23% for the three months ended March 31, 2012, from 43.00% for the same period in 2011.
º Net income attributable to stockholders: Net income attributable to our stockholders decreased by $2.10 million, or 79.03%, to $0.56 million for the three months ended March 31, 2012, from $2.66 million for the same period in 2011.
º Fully diluted net income per share: Fully diluted net income per share was $0.03 for the three months ended March 31, 2012, as compared $0.13 for the same period in 2011.

Results of Operations

The following table sets forth key components of our results of operations for
the periods indicated.

                               Three Months Ended March 31,
                                                                      $              %
                                  2012               2011           Change         Change
Sales revenue               $    11,449,425    $   14,052,920   $  (2,603,495 )     (18.53 )
Cost of sales                    (6,843,635 )      (8,010,229 )     1,166,594       (14.56 )
Gross profit                      4,605,790         6,042,691      (1,436,901 )     (23.78 )
Operating expenses:
       Administrative
expenses                          1,252,829           712,931         539,898        75.73
       Research and
development expenses                253,983           347,489         (93,506 )     (26.91 )
       Selling expenses           2,254,597         1,699,863         554,734        32.63
Total operating expenses          3,761,409         2,760,283       1,001,126        36.27
Income from operations              844,381         3,282,408      (2,438,027 )     (74.28 )
Interest income                       8,278            13,886          (5,608 )     (40.39 )
Other income                        229,461             4,757         224,704      4723.65
Finance costs                      (401,450 )        (192,597 )      (208,853 )     108.44
Income before income taxes
and noncontrolling
interests                           680,670         3,108,454      (2,427,784 )     (78.10 )
Income taxes                        (75,964 )        (424,466 )       348,502       (82.10 )
Net income before
noncontrolling interests            604,706         2,683,988      (2,079,282 )     (77.47 )
Net loss attributable to
noncontrolling interests            (47,527 )         (27,410 )       (20,117 )      73.39
Net income attributable to
THT common stockholders     $       557,179    $    2,656,578   $  (2,099,399 )     (79.03 )

The following table shows our sales revenue by product for the three months ended March 31, 2012 and 2011:

                                         Three Months Ended March 31,
                                         2012                      2011
                                    $             %            $            %
Plate heat exchanger          $   5,114,689     44.70%   $   5,618,101      40%
Heat exchange unit                3,670,921     32.06%       4,252,966      30%
Air-cooled heat exchanger           482,240      4.21%         427,817       3%
Shell-and-tube heat exchanger       837,704      7.32%       2,864,725      20%
Others                            1,343,871     11.71%         889,311       7%
TOTAL                         $  11,449,425       100%   $  14,052,920     100%

Cost of sales. Our cost of sales is primarily comprised of the costs of our raw materials, labor and factory overhead. Our cost of sales decreased by $1.17 million, or 14.56%, to $6.84 million for the three months ended March 31, 2012, from $8.01 million for the three months ended March 31, 2011. The decrease in the cost of sales was generally in line with the decrease in our sales revenue. Cost of sales as a percentage of sales revenue were 59.77% and 57.01% for the three months ended March 31, 2012 and 2011, respectively, an increase of 2.76 percentage points. The increase was mainly attributable to the increase in labor costs and raw material costs.

Gross profit. Our gross profit is equal to the difference between our sales revenue and our cost of sales. Our gross profit decreased by $1.44 million, or 23.78%, to $4.61 million for the three months ended March 31, 2012, from $6.04 million for the same period in 2011. The decrease in our gross profit was mainly attributable to decreased sales revenue from plate heat exchangers, shell-and- tube heat exchangers and heat exchange unit. Although the average unit selling price of our products increased in the three months ended March 31, 2012 in comparison with the same period in 2011, gross profit margin for the three months ended March 31, 2012 dropped to 40.23% from 43.00% for the same period in 2011. The decrease in our gross profit margin was mainly attributable to the increase in labor costs and raw material costs as noted above.

Administrative expenses. Our administrative expenses consist of the costs associated with staff and support personnel who manage our business activities. Our administrative expenses increased by $0.54 million, or 75.73%, to $1.25 million for the three months ended March 31, 2012, from $0.71 million for the same period in 2011. As a percentage of sales revenue, administrative expenses increased to 10.94% for the three months ended March 31, 2012, as compared to 5.07% for the same period in 2011. The increase in administrative expenses was primarily due to an increase of allowance for doubtful accounts. Allowance for doubtful accounts increased by approximately $0.43 million, to approximately $0.16 million in the three months ended March 31, 2012 compared with a reversal of allowance for doubtful accounts of $0.27 million for the same period in 2011. The increase in the allowance for doubtful accounts was mainly due to our policies for bad debt reserves. The Company records an allowance for doubtful accounts at a rate of 25% for receivables aged between 1 to 2 years, 50% for receivables aged between 2 to 3 years and 100% for receivables aged over 3 years.

Research and development expenses. Our research and development expenses consist of the costs associated with research and development personnel and expense in research and development projects. Our research and development expenses decreased by $0.10 million, or 26.91%, to $0.25 million for the three months ended March 31, 2012, from $0.35 million for the same period in 2011. The decrease in reseach and development expenses was mainly attributable to we only have a few new products are in the process of research and development.

Selling expenses. Our selling expenses include sales commissions, the cost of advertising and promotional materials, salaries and fringe benefits of sales personnel, after-sale support services and other sales-related costs. Our selling expenses increased by $0.55 million, or 32.63%, to $2.25 million for the three months ended March 31, 2012, from $1.70 million for the same period in 2011. As a percentage of sales revenue, selling expenses increased to 19.69% for the three months ended March 31, 2012, as compared to 12.10% for the same period in 2011. The increase was mainly attributable to the increased travelling expenses of our sales personnel. Traveling expense increased by $0.35 million, or 30.17%, to $1.51 million for the three months ended March 31, 2012, from $1.16 million for the same period in 2011. The increase in travelling expenses was mainly due to we expand our sales team to expand our market shares.

Income taxes. Our income taxes decreased to $0.08 million for the three months ended March 31, 2012, from $0.42 million for the same period in 2011, as a result of the decreased taxable income.

Net income attributable to common stockholders. As a result of the cumulative effect of the foregoing factors, our net income attributable to common stockholders decreased by $2.10 million, or 79.03%, to $0.56 million for the three months ended March 31, 2012, from $2.66 million for the same period in 2011. As a percentage of sales revenue, our net income attributable to common stockholders was 4.87% and 18.90% for the three months ended March 31, 2012 and 2011, respectively.